House Democrats Demand Documents on Contract Fraud Rule Loophole Soft on Overseas Work

House Democrats demanded documents Thursday about a multibillion-dollar overseas contracting loophole to track down how — and why — the Bush administration slipped it into plans to protect taxpayer money.

Leaders of the House Oversight and Government Reform Committee gave the administration until April 4 to turn over the documents or, aides have said, face a possible subpoena.

The controversial loophole has irked Democrats and Republicans alike. But it has the support of a trade association that lobbies on behalf of giant global government contractors, including Blackwater USA, KBR Inc., Boeing Co., CACI International, Inc. and Lockheed Martin.

The United States has spent more than $102 billion over the last five years to help rebuild Iraq and Afghanistan. In that time, the Justice Department has uncovered at least $14 million in contract bribes in those two nations alone.

"At a time when the United States is engaged in wars in Iraq and Afghanistan, conducting extensive redevelopment programs in both countries, and employing the services of an unprecedented number of private contractors, preventing fraud by contractors overseas should be a high priority," Democrats wrote in letters sent to the White House Office of Management and Budget and four other executive agencies.

"Instead, the exemption for contracts to be performed overseas appears to have been inserted in the rule late in the process and against the wishes of the Department of Justice, which raises serious questions as to why and how such a policy was developed," the lawmakers wrote.

The letters were signed by House Oversight Chairman Henry Waxman of California and committee members Reps. Edolphus Towns of New York and Peter Welch of Vermont.

A spokeswoman for the OMB did not immediately respond to a request for comment. Letters also were sent to the Justice and Defense departments, NASA and the General Services Administration.